At O’Brien Ford of Shelbyville, we have many new and used Ford cars for sale, including the 2019 Ford Focus and the 2019 Ford F-150. If you’re in the market for a new car this year, remember that you need to figure out your budget before you start test driving. Many drivers get in over their heads with car loan payments, so starting with your budget can help you prevent that mistake. Here’s where you should start with a car budget.
Check Your Credit Score and Evaluate Your Debt
First, think through all of the debt you already have, whether personal loans, a mortgage, credit card debt, etc. These debts will impact your credit score, which you should also check while you’re budgeting for a new car. These factors will be taken into account when a lender determines if you’re approved for a loan and what kind of interest rate you’ll have on your car loan. Our Ford dealers can talk to you about your financing options regardless of your credit history.
Monthly Payment Plan
Next, figure out how much you can afford to pay each month on a car loan. This requires an assessment of your cash flow—how much money you make each month and your other expenses. Make sure you can afford a car payment on top of everything else. Some people recommend that your monthly payment shouldn’t be more than 20% of your take-home pay.
If you have money saved up, you’ll need to consider the down payment you can afford on your new Ford car. The bigger the down payment, the less your monthly payment will be, so it may be worth saving up a couple extra months before buying a car.
If you still have questions about budgeting for a new car, our Shelbyville used car dealers can help. Visit us today to learn more.